Interim Results 6 months ended 30 June 2019 - Chris Pullen Chief Executive Officer - Staffline Group PLC
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Interim Results 6 months ended 30 June 2019 Chris Pullen Chief Executive Officer Mike Watts Chief Financial Officer
Group
Summary
Group revenue Up 11% Overview
(H1 2018: £481m)
£535m Recruitment up 15%
PeoplePlus down 20%
Recruitment
• Significant impacts from the delay to
Group operating profit* Down 77% publication of FY18 results
(H1 2018: £16.3m) • Challenging trading environment
£3.7m Recruitment down 50%
PeoplePlus down 113%
• Near term outlook of reducing consumer
confidence and uncertainty
• Strong platform for recovery to future growth
Group operating margin* Down 270bps
(H1 2018: 3.4%) PeoplePlus
0.7% Recruitment down 120bps
PeoplePlus down 1600bps • Transformation complete, as planned
• Expecting profitable H2 under new operating
Net Debt Dec 2018: £63.0m, model
Acquisitions: £5.3m • Good prospects for FY20
£89.2m Post H1 £37m net raised
through equity issue
* Underlying
1
Group
Market leading platforms,
Positioned for return to growth
Making our
• Clear market leader by size and scale customers
• Uniquely differentiated through worker more successful
Recruitment engagement strategy
• Winning the race to find workers
• UK’s market leading Adult Skills and Making a direct
Training business difference to
• Transition to new operating model now the lives of one
PeoplePlus complete million people
• Portfolio business of service contracts, by 2022
with diverse revenue streams
Enabling the future of workTM 2
Group Financial Performance
Group
Half year results
Recruitment People Plus Total Group Recruitment People Plus Total Group
H1 2019 H1 2019 H1 2019 H1 2018 H1 2018 H1 2018
£m’s £m’s £m’s £m’s £m’s £m’s
Sales revenue 493.2 41.4 534.6 429.6 51.4 481.0
Gross profit 35.7 9.3 45.0 33.3 20.3 53.6
Gross profit margin 7.2% 22.5% 8.4% 7.8% 39.5% 11.1%
Underlying operating profit 4.6 (0.9) 3.7 9.2 7.1 16.3
Operating profit margin 0.9% (2.2%) 0.7% 2.1% 13.8% 3.4%
• Group revenue up 11.1%; organic revenue down 12.4%.
• Recruitment revenue growth of £63.6m (14.8%), driven by benefit of six acquisitions in 2018. Organic
Recruitment revenue down £44.1m (-10.3%).
• PeoplePlus revenue decline reflects the final closure of the Work programme and subsequent
transformation of PeoplePlus during 2019
• Group underlying operating profit margin reflects the challenging first half trading with lower margins
in Recruitment and losses in PeoplePlus
4
Group
PeoplePlus transformation complete
£3m cash exceptionals in Recruitment
Six months ended 30 June Underlying 2019 Underlying 2018 • No dividend declared
£m £m
• Trading exceptional items;
Operating Profit 3.7 16.3
£1m exceptional professional
Finance Costs (2.2) (1.3) fees incurred in relation to the
Pre tax profit 1.5 15.0 extended audit process
Taxation - (2.8)
£2m incurred on fundamental
Post tax profit 1.5 12.2 reorganisation of the
Dividend PS (p) n/a 11.3 Recruitment division – staff
Basic Earnings PS (p) 5.6 47.6
redundancies and 25 property
exits.
Diluted Earnings PS (p) 5.6 47.2
Dividend cover (x) n/a 4.2 • More efficient regional
operating model
Exceptional Items • Optimised with digital
candidate resourcing
Amortisation of intangible assets arising strategy
6.2 4.9
on business combinations
Reorganisation costs 2.2 -
Share based payment (credit) (0.2) (0.4)
Professional fees 1.0 -
9.2 4.5 5
Group
Net Debt
Net debt increased by £26.2m
from December 2018
Net Debt increase includes: 0.6
1.3
• Deferred acquisition costs of £5.3m 1.2
2.0
• Exceptional cash costs of £1.7m
plus £6.8m of 2018 exceptional 5.3
costs settled.
• £12.2m VAT liabilities movement 1.0 4.0
• £4.0m capex
12.2
Debt and banking facilities 89.2
refinanced in June 2019
£37m equity raised in July 8.5
6.7
2019 18.6
63.0
30 Jun 2019 31 Dec 2018
£m £m
Debt 94.2 79.2 Net debt
Dec 18
Underlying
EBITDA
Exceptional
cash
VAT
liabilities
Working
Capital
Capital
expenditure
2018
acquisitions
Interest
paid
Bank
arrangement
Corp.
tax
Sale
proceeds
Net debt
Jun 19
costs others fees paid
Cash 5.0 16.2
Note: depreciation and capex stated after IFRS 16 Leases adjustments of £1.2m and £0.3m
Net Debt 89.2 63.0 respectively.
6
Recruitment
Recruitment
H1 2019 headlines
Financial: Operational:
Revenue Macro Environment
Up 15% - benefit of
• Headwinds from economic and political
£493m
2018 acquisitions
Organic down 10%
uncertainty
(H1 2018: £430m) • Industry wide demand challenges with
increased price competition
Underlying Operating Profit Organic Growth
• New contract momentum slowed by delay in
£4.6m
Decreased 50%
(H1 2018: £9.2m). publication of 2018 results
Underlying Operating Profit margin Competitor Differentiation
Down from 2.1% in 2018 • Impact of digital investment coming through
0.9% • Early proof points indicate strong medium term
opportunity for pricing and consolidation
8
A tough trading environment…
Delay to the FY18 results
• Overall, lost time in the company’s development,
but not permanently damaged
Political and Economic uncertainty hitting
consumer sentiment
• Customers are increasingly taking defensive
actions and reducing their exposure
to temporary labour, which they perceive to be at
risk from a hard Brexit
• Overall, customer demand is significantly down on
prior year
But, Staffline could not be better placed to
benefit from a tight labour market
9Recruitment
Recruitment update at a glance
• Size and scale providing resilience, but • Consolidation trend continues
headwinds in 2019
• Growth opportunities with new and existing
• Engagement platform provides competitive blue chip clients
differentiation
• Unrivalled blue-chip client base
Customer locations Peak workforce
443 60,300
fully flexible workers
Recruitment market Food
share
11% 70%
of revenues
10Recruitment Strategy proof points coming through • 88% increase in the total number of new users visiting the Staffline website in H1 2019 • Personalised email marketing campaigns generate 65,000+ new users to staffline.co.uk per month • A year on year increase of 216% of users typing the Staffline website address and accessing directly • 22% increase in website traffic directly driven from search engines such as Google on prior year Year on year worker attrition reduced by 23% 11
Recruitment
Resulting in opportunities to
improve commercial terms
Some early examples of service differentiation
leading to better pricing
Customer 1
20%
fee increase
Customer 2
20%
fee increase
Customer 3
24%
fee increase
Customer 4
30%
fee increase
12PeoplePlus
PeoplePlus
H1 2019 headlines
Financial: Operational:
Revenue Completed transition to leading skills and
Down 19% as Work
training provider
£41m Programme ends
(H1 2018: £51m)
• Work programme ended March 2019
Underlying Operating Loss Apprenticeship Levy
• Key wins with Heathrow, Standard Life,
£0.9m
Reduced 113%
(H1 2018: profit of Topps Tiles and Buildbase
£7.1m) • Strong pipeline developed
Costs reduced by New wins
Reduced 23%. Strong cost • ESFA - £35m over 27 months, up from £14m
£3m control programme and low
operational gearing.
• PEF - £105m TCV over 4 years – More than
doubling our existing business
ESFA – Education and Skills Funding Agency
PEF – Prison Education Framework
14PeoplePlus
2019 - A Year of Transition
January 2018 Today 2020-2022
Customer • >390 colleagues engaged on • Work Programme closed with • Contract base more diversified
diversification Work ProgrammePeoplePlus
With further opportunities
in the pipeline
Pipeline
2019
Sector TCV (m)
Skills 4
Employability 64
Justice 4
Communities 3
Enterprise 8
Total 83
2020
Sector TCV (m)
Skills 90
Employability 26
Justice 461
Communities 57
Enterprise 7
Total 641
• Staffline bid win rate 1 in 2
• Average contract length of 3 years
16PeoplePlus
Apprenticeship market is
a significant opportunity
c. 22%
drawn down by the
£3bn
Market growth by 2022
end of January 2019
Total
Apprenticeship
Market
£2.4bn
17Group
2019 Priorities
Recruitment PeoplePlus
• Realise benefits of • Advance leadership position
differentiation strategy in Apprenticeship levy
Worker experience and market
employee engagement • Enhance digital learning and
Customer satisfaction engagement capabilities
• Optimise existing business • Continue contract
diversification and
Optimisation of regional improvement strategy
labour pools
• Continue shift away from
Maximise cash conversion
reliance on Central
Margin enhancement Government funding
Group
01 02 03
Optimise existing Return to strong De-lever
business cash conversion balance sheet
19Group
Outlook
Recovery to normalised earnings
Recruitment PeoplePlus
• Economic and political uncertainties • Positive outlook for PeoplePlus in
creating a tough trading environment, 2020 under its new operating model
following a difficult H1 19
• Not affected by FY18 results delay
• Financial performance heavily weighted
to H2 and the Q4 peak trading season in • In excess of 60% of 2020 revenues
particular already contracted
• Strategic initiatives of 2018 have • Non-Apprenticeships business expected
created an excellent platform for to contribute c.85% of 2020 PeoplePlus
future growth, with early proof points revenue
coming through
FY19 Guidance
• EBIT approximately £20m
• Net Debt/EBITDA c.2x
20Enabling the
future of work
TM
21Appendices
Group
Significant Shareholders
(Top 20: represents 91.0% of shares in issue)
Top 20 shareholders at 04 September 2019
HRnet Group 29.9%
Octopus Investments 13.6%
Invesco inc Perpetual Asset Management 8.6%
Legal & General Investment Management 7.3%
Gresham House 5.3%
Hunter Capital Ltd Partnership 5.1%
Hargreaves Lansdown Asset Management 3.1%
Bayberry Capital Partners 2.9%
Standard Life Aberdeen 2.5%
Coutts & Co 2.0%
Staffline Group Plc Employee Benefit Trust 1.7%
Lombard Odier Asset Management 1.6%
Killik Asset Management 1.6%
Interactive Investor Trading 1.3%
Barclays Bank 1.0%
A J Bell Securities 0.9%
Miton Asset Management 0.8%
Peel Hunt 0.7%
Andy Hogarth 0.7%
Tilney Group 0.7%
23Group
Disclaimer
No representation or warranty, expressed or implied, is made or given by or on behalf of Staffline Group plc (the
“Company” and, together with its subsidiaries and subsidiary undertakings, the “Group”) or any of its directors or any other
person as to the accuracy, completeness or fairness of the information contained in this presentation and no responsibility
or liability is accepted for any such information. This presentation does not constitute an offer of securities by the Company
and no investment decision or transaction in the securities of the Company should be made on the basis of the information
contained in this presentation.
This presentation contains certain information which the Company’s management believes is required to understand the
performance of the Group. However, not all of the information in this presentation has been audited. Further, this
presentation includes or implies statements or information that are, or may be deemed to be, "forward-looking statements".
These forward-looking statements may use forward-looking terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "will" or "should". By their nature, forward-looking statements involve risks and
uncertainties and recipients are cautioned that any such forward-looking statements are not guarantees of future
performance.
The Company's or the Group’s actual results and performance may differ materially from the impression created by the
forward-looking statements or any other information in this presentation.
The Company undertakes no obligation to update or revise any information contained in this presentation, except as may
be required by applicable law and regulation. Nothing in this presentation is intended to be, or intended to be construed as,
a profit forecast or a guide as to the performance, financial or otherwise, of the Company or the Group whether in the
current or any future financial year.
This presentation and its contents should not be distributed, published or reproduced (in whole or in part) or disclosed by
recipients to any other person.
24You can also read
